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US productivity rose 0.7% in the first quarter, vs 0.9% increase expected

  • U.S. worker productivity increased modestly in the first quarter.
  • A jump in compensation supported views that inflation pressures were building up.
  • The Labor Department said on Thursday nonfarm productivity, which measures hourly output per worker, rose at a 0.7 percent annualized rate in the January-March quarter.
A worker checks the mechanical operation of a new aircraft seat during assembly at the Zodiac Seats France plant, operated by Zodiac Aerospace, in Issoudun, France.
Balint Porneczi | Bloomberg | Getty Images
A worker checks the mechanical operation of a new aircraft seat during assembly at the Zodiac Seats France plant, operated by Zodiac Aerospace, in Issoudun, France.

U.S. worker productivity increased modestly in the first quarter, and a jump in compensation supported views that inflation pressures were building up.

The Labor Department said on Thursday nonfarm productivity, which measures hourly output per worker, rose at a 0.7 percent annualized rate in the January-March quarter.

Fourth-quarter productivity was revised to show it increasing at a pace 0.3 percent instead of being unchanged as previously reported. Compared to the first quarter of 2017, productivity increased at a rate of 1.3 percent.

Economists polled by Reuters had forecast productivity rising at a 0.9 percent pace in the first quarter. Hourly compensation accelerated at a 3.4 percent rate in the January-March quarter after rising at 2.4 percent pace in the fourth quarter. It increased at a 2.5 percent rate compared to the first quarter of 2017.

Unit labor costs, the price of labor per single unit of output, rose at a 2.7 percent pace in the first three months of the year after rising at a rate of 2.1 percent in the fourth quarter. Compared to the first quarter of 2017, unit labor costs rose at a 1.1 percent rate.